Global corporations Sinopec, Vitol, Total and Glencore each earn
at least $200 billion in annual sales -- but you've probably never
heard of them.
It's the lack of familiarity with the world's top global
companies that keeps many of us frominvesting in foreign markets.
But in the past decade, the rules of the game have changed -- for
the better. Rather than trying to figure which foreign companies
should be in a well-rounded portfolio, many investors are seeking a
new class of exchange-tradedfunds ( ETFs ) that
provides all of the international exposure you'll ever need.
They're called "single-country funds" or "country-specific
ETFs." For example, if you think top Japanese companieswill benefit
from rising trade with China, then you might want to check out the
iShares MSCI JapanIndex ( EWJ ) .
ThisETF owns big stakes in Toyota ( TM ) ,
Canon ( CAJ
) , Honda ( HMC ) ,
Softbank (the country's leading internet provider) and Takeda
Pharmaceuticals, one of the world's largest drug makers -- among
You can now choose from dozens of ETF options, and some of the
ETF providers provide country-specific exposure with unique twists.
For example, Wisdom Tree's ETF strategists are big fans of
dividend-payingstocks , so theyoffer ETFs such as the
Wisdom Tree AustraliaDividend Fund ( AUSE ) , the
Japan Small Cap Dividend Fund (DFJ) and the
Wisdom Tree Middle East Dividend Fund (GULF) .
Wisdom Tree also offers ETFs that focus on foreignbonds ,
currencies and even specific global industries such asreal estate
and electric utilities.
You can read more about Wisdom Tree's offerings by clicking here.
In addition to Wisdom Tree, three other ETF providers offer the
bulk of countryfund offerings: Barclays (the sponsor of the
top-selling iShares funds), Global X and Market Vectors. Let's take
a closer look.
This family of funds is the most extensive, with a
specific ETF geared toward more than 30 countries. In fact, if you
are looking to target specific countries such as Turkey, Belgium or
Malaysia, these funds are your only direct path to them. Many of
these funds have been around for more than a decade and have become quite popular with investors.
The ETF strategists at Global X likely realized the
iShares platform already covered manybases , so they've constructed
ETFs that take a slight detour from the traditional country-fund
ETF approach. For example, the Global X FTSE Nordic Region
ETF (GXF) provides exposure across Scandinavia, while the
Global X Andean 40 ETF (AND) focused on the
largest companies among the Andean nations of South America.
Global X also offers a handful of China-focused ETFs, with each
one geared toward a specificinvestment theme such as consumer
stocks, financial stocks, etc.
Although Van Eck , the sponsor of Market Vectors ETFs,
offers a half-dozen funds focused on specific countries such as
Poland, Russia, Egypt and Colombia, there are also a smattering of
regional thematic ETFs, including:
- Africa Index ETF (AFK)
- Gulf States Index ETF (MES)
- Latin America Small-Cap Index (LATM)
When these funds catch on with investors, they can really take
off. The Market Vectors Vietnam ETF (VNM) , for
example, surged nearly 50% from December 2012 to February 2013 as
that country'seconomy appears to be building a head of steam.
Action to Take --> Yet during the long haul,
many of these countries are likely to keep boosting their economies
at a fast pace. Indeed, theIMF expects global economic growth
outside the United States and Western Europe to approach 6% in
2013. And many economists expect that trend to continue -- unless
our economy, which accounts for 25% of globalGDP , hits another
Disclosure: Wisdom Tree's founder, Jono Steinberg, is a
former superior of David Sterman.
This article originally appeared on InvestingAnswers.com:
Profit From International Investing -- Here's How
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